Bitcoin rally 2021 reloaded? BTC is on the verge of forming a „golden cross“
Bitcoin is looking at an imminent crossover between its short-term and long-term moving averages – a phenomenon that many professional traders see as an indication of future price rallies (New all-time high for Bitcoin in a few days?).
The convergence is called a „Golden Cross“ and is a positive momentum Bitcoin Billionaire indicator that occurs when an asset’s 50-period moving average moves above its 200-period moving average. It occurs in three stages.
The first requires a prevailing downtrend to bottom when selling sentiment subsides.
In the second stage, the 50-period MA jumps above the 200-period MA to confirm a breakout. Meanwhile, the final stage sees a continuation of an uptrend to higher price levels.
Based on what bitcoin prices have shown over the past two weeks, it looks like the cryptocurrency is jumping from the first to the second stage.
Is bitcoin off the bottom?
The BTC/USD exchange rate showed signs of bottoming within the $27,500 to $31,000 range after capping several steeper sell-off attempts by the bears in the recent past. On-chain analysts note that the $30,000 level attracted many institutional investors to the market, making it less likely that BTC/USD would fall below the said price floor.
Further evidence came from MicroStrategy, a Nasdaq-listed software company with one of the largest bitcoin reserves. The company announced on Wednesday that it had bought $10 million worth of BTC, „at an average price of $33,810“.
Meanwhile, New York-based investment firm Grayscale also increased its bitcoin accumulation in the third week of January, when the price traded in the $32,000-36,000 range
In a sense, this marks the first „golden cross“ phase as Bitcoin forms a local floor around $30,000.
Upcoming crossover and breakout
The next stage is the 50-200 MA crossover itself. Nevertheless, based on Bitcoin’s past experience with golden crosses, the phenomenon does not guarantee an immediate uptrend.
Last October, the cryptocurrency slid more than 5 percent to $10,350 just as it confirmed a golden cross. But the bulls took over, sending prices up as much as 297 per cent over the next month to a record high near $42,000.
Similarly, BTC/USD experienced a mild correction towards the 20-period MA in late July after posting a 50-200 MA crossover.
In some cases, Bitcoin (Go to Plus500 Buy Bitcoin Guide) also entered protracted consolidation periods. Nonetheless, the cryptocurrency always appeared more bullish than last time.